Tag Archives: zero hedge

The jobs report: another opportunity to shake our confidence in the government

Summary: Today we look at lies about the jobs report from Zero Hedge. These are part of a larger campaign to destroy our confidence in the government as a means of collective action, leaving us isolated and weak.

WW2 propaganda

True then and now


Conservatives have long waged a campaign to weaken our confidence in unions and government, the only organizations that can resist the 1%. Alone, as individuals, we’re pawns So they’re using their agents to separate us, as shepherds’ dogs work sheep, with a propaganda barrage on us of immense size. Instead of explosives, it consists of ideas — myths and misinformation. Too overwhelming for rebuttals, our only hope lies in skepticism.

Our gullibility is their greatest advantage, but we can do better

These stories comes from sources providing an artfully arranged combination of information and misinformation (like worms on fishhooks). Few do it better than Zero Hedge, which mixes information from valuable sources with misinformation and outright fiction. Today we look at one example, Zero Hedge’s myths about the Bureau of Labor Statistics.

4 Million Fewer Jobs: How The BLS Massively Overestimated US Job Creation
Zero Hedge, 5 August 2014 — Opening:

“When it comes to the all-important monthly payrolls number which sets the tone for risk over the next month, one of the biggest variables in the BLS’ “estimate” (because all jobs numbers are that: statistical estimates) of US jobs is the monthly birth-death adjustment. What this monthly fudge factor is, in a nutshell, is the BLS’ estimation for how many new businesses are created over the period offset by older “dying” businesses, leading to incremental jobs that are only polled by the BLS with a substantial lag. Here is how the BLS explains this adjustment: …”

This is correct, as is the following excerpt they provide from the BLS website. They then add their special mixture of fact and fiction.

The latest proof of just how broken the economy has become, and serves as a big flashing red question mark about just how massively overestimated job creation is due to a wildly erroneous birth/death estimator, comes from a research report by the Brookings Institution titled: “The Other Aging of America: The Increasing Dominance of Older Firms.”

This study, one of several by Brookings about this important trend, shows the decline in entrepreneurship in the US economy. ZH quotes:

Perhaps more striking, our research showed that the decline in new firm formation rates had occurred in every U.S. state and nearly every metropolitan area, in each broad industry group, and in all firm size classes … the rate of new firm formations fell significantly during this period — occurring because the number of new firms being formed each year (numerator) didn’t keep pace with the growth in the stock of total firms in the economy (denominator).

Zero Hedge then assumes the BLS has not accounted for this (guessing), and draws a dramatic conclusion (their bold):

… if indeed this declining dynamism is “contributing to the decline in entrepreneurship as well” then the whole premise behind the birth/death adjustment, or rather the “Birth” contribution … goes out of the window.

…  here is the bottom line: since Lehman, or starting in 2009, the Birth/Death adjustment alone has added over 3.5 million jobs. Or rather “jobs”, because these are not actual jobs – these are BLS estimates for how many jobs newly-formed businesses have created based purely on statistical estimations and hypotheses that the US economy in 2014 is as it was in 1960. Which means that the traditional dynamics used behind the Birth and Death adjustment are now merely Dead, and US employment is overestimated by as much as three and a half million jobs!

This also means that any boasts by Obama about “solid US economic growth” under his regime, and that all those jobs lost since Lehman have allegedly since been recovered, are nothing but even more lies.

From Zero Hedge: Birth Death model

Zero Hedge, 5 August 2014


This is big news. They even added the standard GOP refrain of “Obama lies”. But false; it’s ignorance on stilts. Note the last sentence from the BLS page about the birth/death adjustment, from which ZH quoted at the start of their article:

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Does the September jump in food stamp recipients signal a red alert for the US economy?

Summary:  The number of households getting food stamps tells us little about the future (ie, it’s not a leading indicator). It tells us something about the present. And reporting about it tells us much about the reporter.  America will become a stronger nation when we demand high-quality sources of information, and complain about those that twist the news to suit our biases. That’s something each of us can do, starting today.

The US Department of Agriculture released the food stamp data (ie, SNAP) for September. Before tropical storm Sandy hit.  Zero Hedge tells a story about the numbers.

The just reported foodstamp number for September was a doozy, with 607,544 new Americans becoming eligible for foodstamps, as a record 47.7 million Americans are now living in poverty at least according to the USDA. The monthly increase was the highest since May 2011, and with August’s 421K new impoverished America, over 1 million Americans made the EBT card their new best friend. It is unclear just which atmospheric phenomenon will get the blame for this unprecedented surge in poverty, which comes at a time when the pre-election economic data euphoria was adamant that the US economy was on an escape velocity to utopia.

Being from Zero Hedge, this is of course misleading.  The USDA data page clearly shows that September data includes disaster relief, and they hyperlink to an explanation.  The number of people getting SNAP benefits rose 608 thousand in September. The number of people getting new SNAP benefits in response to Hurricane Isaac: 654 thousand.

USDA Food & Nutritional Service Responses to Hurricane Isaac

FNS approved operation of the Disaster Supplemental Nutrition Assistance Program (D-SNAP) for new D-SNAP recipients and ongoing SNAP recipients to help disaster survivors in Louisiana and Mississippi in response to Hurricane Isaac which made landfall on August 28, 2012. Preliminary reports show that as of October 12, 2012, FNS has provided over $114.9 million in Disaster Supplemental Nutrition Assistance Program (D-SNAP) benefits to help disaster survivors in Louisiana and Mississippi in response to the extended power outages and flooding caused by Hurricane Isaac. Over 654,652 individuals in 283,598 households received these benefits. In addition, FNS provided over $19.2 million in supplemental benefits to 299,169 individuals in 125,605 ongoing SNAP households affected by the disaster.

Zero Hedge also provides graphs (as usual, of excellent quality), which tells the story of our economic recovery: weak — and leaving many people behind.


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We are ignorant because we enjoy being lied to. Today we look at lies about the US debt.

Summary:  Much of public policy debate today consists of lies by the Right and rebuttals using simple facts, which have no effect.  It’s a losing game, as an emotionally appealing Big Lie usually wins if repeated frequently to a weak and foolish people.

Today’s example, from that engine of misinformation the Zero Hedge website:

While we reserve judgment for S&P’s effectiveness at being accurate in anything they do (they are, after all a rating agency and as such they goal seek results to comply with what their paying groupthink seeking customers demand), we would like to redirect to the modest topic of CBO predictive efficiency (the organization that is at the basis of the current credibility spat between Treasury and S&P, and which, incidentally has created the baseline forecast against which the debt ceiling compromise plan is supposed to cut $2.1 trillion over the next decade), by pointing out according to the same CBO back in 2001, net US indebtedness in 2011 would be negative $2.436 trillion, the ratio of debt held by the public to GDP would be 4.8%, total budget surplus would be $889 billion, and GDP would be $16.9 trillion.

Here is the graph they show, from page 16 of “The Budget and Economic Outlook: Fiscal Years 2002-2011“, Congressional Budget Office, January 2001

The Zero Hedge propagandists omit the core of the CBO’s analysis:

“Although there are signs that economic growth is moderating from recent robust levels, substantial budget surpluses remain on the horizon for the next decade in the absence of large changes in policy.  Over the longer term, however, budgetary pressures linked to the aging and retirement of the baby boom generation threaten to produce record deficits and unsustainable levels of Federal debt.”

Rather than foolishly wrong, this was prophetic.  The CBO analysts correctly anticipated the 2001 recession, which despite the effect of 9-11 was the lightest of the post-WWII era.  They put these events properly in context against the larger story of the age wave.  Most important are the words “in the absence of large changes in policy.”  They could not know about the insanity to come.

Such as the policy changes made by President Bush Jr., which have put the US on the road to financial ruin.

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“2nd Iceland volcano issues warning” (Katla speaks to MSNBC’s newshounds)

Summary:  Today’s fearful headlines about Icelandic volcanos from the news media and popular websites.  And the real story.  BTW — “soon” means something different to geologists than laypeople.

Disturbing:  “2nd Iceland volcano issues warning“, MSNBC, May 2010 — “Scientists say powerful Katla is ‘close to failure’.”  The opening is misleading but the full article is accurate.

A second, much larger volcano in Iceland is showing signs that it may be about to erupt, scientists have warned. Since the start of the Eyjafjallajökull eruption, which caused cancellations of thousands of flights in Europe because of a giant ash cloud, there has been much speculation about neighboring Katla. An initial research paper by the University College of London Institute for Risk and Disaster Reduction said …

Terrifying:  “Iceland President Warns That ‘Significant Eruption At Katla Volcano Is Close’“, Zero Hedge, 27 May 2010 “Icelandic president Ólafur Grímsson has warned governments around Europe ‘that a significant eruption at the volcano is close.'”  He said no such thing.

The real story:  “Volcanic hazard from Iceland: analysis and implications of the Eyjafjallajökull eruption“, University College of London’s Institute for Risk and Disaster Reduction, May 2010 — Red emphasis added.  Excerpt:

Since the start of the Eyjafjallajökull eruption there has been much speculation about an eruption of the larger, neighbouring Katla volcano.

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Another example of the “it’s on the Internet so it must be true” fail: Zero Hedge

The comments on the FM website are littered with folks — probably smart, well-educated people — parroting nonsense they picked up on the Internet.  We need to be more careful — and hold websites responsible for the information they post.  Today’s example is Zero Hedge, a fun website posting interesting but often misleading information.  Such as this:  “US More Bankrupt Than Ever – $83 Billion April Deficit Is Record For The Month, $30 Billion Worse Than Expected As Tax Receipts Plunge“, Zero Hedge, 12 May 2010:

Well, if nothing else, we now know officially just how great those tax receipts were. Good thing too – we can end that whole superficial tax receipt debate and focus on important things. April’s tax deficit of $83 billion was the highest April deficit on record. America is now more bankrupt than ever. Income was $245.3 billion, 8% below the total recorded last April. Spending was $328.0 billion, up 14% year-over-year. A year ago in April the deficit was $20.9 billion. And here is the data: tax receipts down 7.9% YoY, Individual Income Tax down 21.5% YoY, and more importantly, spending: Total spending up 14.2%, National defense up 17%, Medicare up 39.4%, Social Security up 4.2% and General Government up 5.6%. At least interest payments were down 9.5%.

And now back to your regularly scheduled bankrupt country market melt up.

Classic Zero Hedge.  Technically accurate, grossly misleading.  Like their most frequent fail, writing with great excitement about not-seasonally adjusted data that is boringly typical when properly adjusted for predictable seasonal patterns.  But in early 21st  America, reliability and accuracy doesn’t generate the kind of traffic that’s brought ZH fame and fortune!  Fortunately we like to be ignorant, and on the Internet we’ll find people to help keep us ignorant.

The truth is out there.  If we want it.


Government income and expenditures have large monthly fluctuations, which make year to year comparisons almost useless.  As we see here.   The year-to-date numbers are what we typically see in the early stages of a recovery.  Comparing the first 4 months of 2010 with 2009 shows a far more pleasant picture than painted by Zero Hedge.

  • Receipts up 0.4%
  • Outlays down 4.7%
  • Deficit down 12.4%

Why the dismal April numbers?

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Today’s hot rumor: Fisk’s story about a conspiracy to wreck the US dollar

The demise of the dollar“, Robert Fisk, The Independent, 6 October 2009 — “In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading.”

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within 9 years.

This is unlikely for many reasons.  A few quick ones…

  1. Some of these nations have no reason to risk destabilizing the USA.  Esp the Saudi Princes.
  2. Some of these nations have no reason to risk destabilizing the global financial system. Esp.  Japan.
  3. Many of these nation have leaders who are some combination of cautious, slow, reactive, and incrementalists.
  4. Something of this scale would be almost impossible to keep secret 2 days after the first discussions.
  5. If multiple Hong Kong banking sources knew it, their fingerprints would be all over the US dollar — as they shorted it to the max.

The only thing giving pause is Fisk’s reputation.  While strongly anti-American, he is no pilgrim — and he’s well-wired in the Middle East.

(2)  Memos from the 1970’s, similar fears (update)

At Zero Hedge are two memos from the Carter Administration discussing the possibility of oil being priced no longer in US dollars, but the IMF’s special drawing rights.   The authors:

  • Henry D. Owen, Special Representative for Economic Summits
  • Anthony Solomon, former Undersecretary of the Treasury and President of the New York Fed

During this period there were concerns that the US debt could no longer be financed in dollars, but that (like 3rd world nations) we would have to borrow in real money.

(3)  Recommendations

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